FLEETCOR Technologies, Inc. FLT stock has performed well so far this year and has the potential to sustain the momentum in the near term. Consequently, if you have not taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes it an Attractive Pick?
An Outperformer: A glimpse at this financial transaction services provider’s price trend reveals that the stock has had an impressive run on the bourse on a year-to-date basis. Shares of FLEETCOR have returned 44% on a year-to-date basis, outperforming the 34.1% rally of the industry it belongs to and 13.9% rise of the Zacks S&P 500 composite.
Solid Zacks Rank: FLEETCOR currently carries a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or 2 offer attractive investment opportunities for investors.
Northward Estimate Revisions: The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. Over the past 60 days, the Zacks Consensus Estimate for current-quarter earnings has increased 0.4%. For 2019 and 2020, the estimates have moved up 16.7% and 0.9%, respectively, over the same time period.
Positive Earnings Surprise History: FLEETCOR has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in all the previous four quarters, delivering average positive earnings surprise of 1.7%.
Strong Growth Prospects: The Zacks Consensus Estimate for current-quarter earnings is pegged at $2.79, indicating year-over-year growth of 8.6%. Moreover, earnings are expected to register 10.8% growth in 2019 and 15.4% in 2020.
Growth Factors: FLEETCOR’s top line continues to grow organically driven by increase in both volume and revenues per transaction in some of its payment programs. In first-quarter 2019, organic revenue growth was 11%, driven by solid double-digit growth across the company’s product categories – fuel, corporate payments, tolls and lodging. Organic revenue growth was 10%, 9% and 8% respectively in 2018, 2017 and 2016. For 2019, the company continues to expect 9-11% organic growth.
FLEETCOR has been active on the acquisition front. Since 2002, the company has acquired more than 75 companies and commercial account portfolios. The company has been continuously acquiring and investing in companies both in the United States as well as internationally to expand customer base, headcount and operations and diversify its service offerings across industries.
In first-quarter 2019, FLEETCOR completed the purchase of Nvoicepay. The buyout is expected to expand FLEETCOR’s corporate payments business with full disbursement accounts payable cloud platform. In 2018, the company made a $21.2 million worth acquisition and witnessed $97 million of additional revenues from the acquisitions completed in 2017.
Effective execution led to cash, cash equivalents, and restricted cash of $1.40 billion as of Mar 31, 2019, with no long-term debt to clear off. This significant amount of cash provides FLEETCOR the flexibility to pursue strategic acquisitions and other related investments.
Cash rich companies not only guarantee protection but are also likely to reward shareholders from their deep cash balances. In first-quarter 2019, FLEETCOR repurchased shares worth $3.32 million. In 2018, 2017 and 2016, the company repurchased shares worth $958.7 million, $402.4 million and $187.7 million, respectively. These shareholder-friendly initiatives not only instill investors’ confidence but also positively impact earnings per share.
Other Stocks to Consider
Some other top-ranked stocks in the broader Zacks Business Services sector are Navigant Consulting NCI, Global Payments GPN and NV5 Global NVEE. While Navigant Consulting sports a Zacks Rank #1, Global Payments and NV5 Global carry a Zacks Rank #2 (Buy).
Long-term expected EPS (three to five years) growth rate for Navigant Consulting, Global Payments and NV5 Global is 13.5%, 16.9% and 20%, respectively.
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FleetCor Technologies, Inc. (FLT): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.